MedPAC Proposes Overhaul to Medicare Physician Payment Formula - October 12, 2011

The Medicare Payment Advisory Commission (MedPAC) has faced opposition over a proposal to reform the Medicare physician payment formula. Recently, MedPAC released a draft proposal that would replace the sustainable growth rate (SGR) formula. Currently, the SGR is used to calculate annual, automatic updates to Medicare payments to doctors; however, for several years those updates have resulted in payment cuts. Congress has a history of delaying these cuts, allowing them to accumulate from year to year. MedPAC is considering a 10-year plan to revise physician payments, which would be offset by cuts to most medical specialties. The plan will cut specialist payments by 17 percent and freeze primary care physician pay. The American Hospital Association, the American Medical Association and others have sent letters of opposition to this proposal, citing that MedPAC is demanding too much in health industry cuts to pay for the reform. Though MedPAC voted to recommend its plan to Congress at its meeting on Oct. 6, there are doubts that it will go any further than the commission, as the proposal has been extremely unpopular.